Brent holds above $102, but heads for 2nd monthly loss

Reuters Staff

3 Min Read

* Russian troops enter Ukraine, tensions flare

* OPEC output rises in Aug from July - survey

* U.S. GDP growth rebounds in Q2

By Florence Tan

SINGAPORE, Aug 29 (Reuters) - Brent crude held above $102 a barrel on Friday, but prices were heading for a second monthly loss as ample supply and softening demand in Europe and China outweighed geopolitical concerns.

The European benchmark plunged over 12 percent from a nine-month high reached in June to a more than one-year low last week as bleak demand led to an oil supply glut in the Atlantic Basin.

Brent rose 24 cents to $102.70 a barrel by 0247 GMT and U.S. crude gained 9 cents to $94.64 a barrel, underpinned by U.S. data showing faster than initially thought second-quarter growth in the world’s top economy.

However, oil prices on both sides of the Atlantic were on track for a more than 3 percent loss this month.

“I‘m just surprised that we’ve seen such a big discount over the weeks,” said Ben Le Brun, markets analyst at OptionsXpress in Sydney. If supply tightens, “there’s a chance that we’re quite close to the bottom”, he said.

West African crude exports to Asia were near record levels in September, a Reuters survey of traders showed, although the North Sea market remained well supplied.

Production from the Organization of the Petroleum Exporting Countries (OPEC) also rose despite geopolitical tensions in Iraq, Libya and Ukraine.

OPEC, which supplies a third of the world’s oil, raised its output in August from July, on higher supply from Libya, Angola and Iran, a Reuters survey found.

But analysts expect oil prices to draw some support if the the situation in Ukraine worsens.

Tensions between Ukraine and Russia flared up after Ukraine’s president said on Thursday that Russian troops had entered his country in support of pro-Moscow rebels. The United States and major European countries are considering more sanctions on Russia.

“We could see a little bit of a premium being applied to oil prices should those tensions continue to escalate,” said OptionsXpress analyst Le Brun. (Editing by Himani Sarkar)